What Is The Difference Between Day Trading And Swing Trading? | Motilal Oswal
What Is The Difference Between Day Trading And Swing Trading? | Motilal Oswal

The Difference Between Day Trading And Swing Trading

Online trading, and trading in general, has taken over India, resulting in an avid and enthusiastic bunch of investors going all out to invest. In the present day, more people have Demat accounts, and most of these individuals are on their way to becoming trading success stories, or so they may like to think. Today, most of us think we are ‘perfect’ investors, trying to adopt strategies and tactics of pro traders who have enough experience to know how to make trades in the right way. Swing trading in India and day trading, has hit Indian traders with two very distinct ways to earn returns. Nonetheless, before adopting these ways in the hope that you will make substantial gains, you should be clear about how they differ. This will help you to know which of these to use, or if you can use either at all. 

Day Trading in India

Day trading represents the action of the purchase and sale of any financial instruments like bonds, stocks, commodities and futures in order for profits to be generated from price movements within the span of a 24-hour period, that is, a single day of trading.

Consequently, so that this may effectively occur, varied positions are taken, and these may last from mere seconds to several hours during the day of trading. However these are always finalised and completed to avoid risk exposure. The dual actions of both buying as well as selling occur within the hours of trading. It isn’t impossible to perform the day trading activity, but you require effort and time to track your positions, plus indicators of a technical nature, to decide when you must exit, and where you must exit the market.

A simple day trading guide will tell you that a day trader in India keeps costs at the minimum, as multiple positions in the market have been opened by them. This is a major reason for holding onto  positions overnight as such positions are not subjected to funding fees overnight.

Swing Trading

Day trading in India is gaining momentum, but swing trading is catching up. This is a trading strategy in which traders hold on to positions over many days,  or even weeks. Swing traders may spend more time holding on than day traders, but they find opportunities to earn profit. They open and shut positions rapidly, doing this by depending on liquidity and volatility in the market.

It is common knowledge that swing trading has fewer positions to open with, but these drive higher profits and losses as far as traders are concerned. Unlike typical day traders who may choose their positions with single trades, swing traders do not wish to earn huge profit from single trades. This is because they take on fewer positions, and transaction fees are also lower relative to day traders. Nonetheless, they hold positions overnight, which is subject to funding charges overnight.

Day Trading and Swing Trading Differences 

You have already grasped how swing trading in India and day trading in India works, so you may have drawn conclusions about their distinctions. However there are more to consider with the following factors: 

  • Definitions - Real day traders are the ones who make round trips frequently, amounting to four trades at the minimum, within a  five-day cycle. Swing trading, by definition, is done with the intention of holding positions for longer.
  • Holding Positions - Day traders aim to earn profits, making a living by trading in securities, as they do not hold onto positions overnight. Contrastingly, swing trading is used to buy securities and hold  them for numerous days, or weeks. Swing traders believe that trades will take a long duration to work out positively, and so, they do not have to perform full days of  trading relative to the way day traders do.
  • Patterns - The primary difference between swing and day traders is about the trading pattern. Swing traders hold positions according to market movements to make a large profit. Simultaneously, day traders have their trading based on a substantial degree of technical, fundamental, and quantitative analyses, identifying stocks that may make gains or losses during one trading day.

Learn Trading Strategies 

When you open a Demat account with a savvy broker like Motilal Oswal, you can start trading with a technique that suits your financial goals. Learning with Motilal Oswal is easy as you start to invest gradually, working your way up the ladder of investment. 

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